In every walk of life we come across a situation where we receive an unsigned business letter/Receipt/Advice mailed by a bulk mail originator which bear legend “ This letter/Report Advice is computer generated and therefore does not require any signature”, or similar to that. I think it is best route for originator to escape.

Mere fact of generation of letter/intimation/advice or confirmation on electronic system (computer) electronic typewriter does not confirm authenticity of the document and contents of such letter/intimation/advice or confirmation and as such does not prima-facie bind so called originator. The letter cannot become a document as the same is not duly executed. 

To quote some instances form banking side:

• Most of Foreign banks had since long started issue of term deposit advices with no signature of bank official. It bears the legend above. Some PSU banks too joined the bandwagon. Actually as per RBI directives on deposits banks are required to issue term deposit receipts and not advices and by receipt it is implied that it should be properly signed by competent official of the bank.

In 1985 FEDAI had issued a circular to its members approving the procedure of issuing unsigned “inter-bank FX FE contracts” without signature provided the banks issuing the unsigned confirmation execute an indemnity in favour of counter party bank/s.  The Managing committee of FEDAI in Nov, 1986 had approved format of indemnity which was prepared by Citi Bank.

The Approved format of indemnity inter-alia provides that “the obligee has agreed to accept computerized confirmations of FE contracts originated by obligor upon executing an indemnity by obligor in favour of obligee in the manner hereinafter appearing -----“. The indemnity inter-alia puts a responsibility on the oblige that obligee shall immediately on receipt of computerized confirmation advise the obligor of exception that oblige may have in respect of contents of the computerized confirmation/s.

Not withstanding the validity of such documents the practice was continuing with the iner-bank players for FX contracts. Stretching this untested practice to all and sundry without indemnity may have serious commercial implications. Further such confirmation documents would not be stamped by originator and in legal terms not “properly executed”

Though there are some advantages of sending unsigned communication (like no waiting time for signatory to authenticate several stereo-typed communications) system generated communication could suffer form several serious deficiencies. At times it is possible that system would generate incorrect letter/Receipt/Advice (data input could be wrong) or it may generate a document as per the set standard parameters and mistake in document generation / communication may go unnoticed.

While there is a provision for a facsimile signature I am at a loss to understand as to why the senders of letter don’t sign the letters/receipts/advices. In bulk routine mail communication a facsimile signature could be tolerated / acceptable to recipient. However, in respect of Papers like Term Deposit advice/receipts or FX / OTC option deal confirmations are legal documents to which somebody should own (the responsibility) its origination.

Unless the recipient of the letter at any time agreed to receive such unsigned letters / intimations/ advice explicitly, while understanding its implications, such unsigned communication would not be binding on the receiver of the communication whether due to commercial / industry practice / conventions or otherwise.

The parties to any commercial transaction should endeavor, to replace invalid, illegal or unenforceable provisions with valid provisions.

In my view that under no valid or enforceable provisions under Indian Technology Act, 2000 or otherwise, one can bind oneself /or the other party to the contract/transaction or to information where such paper / document is not properly executed by originator of such communication.

Regulators may initiate debate on this internally and advise all concerned to ensure that documents representing commercial / business transactions are properly executed and the invalid practices are not allowed to spread.

 About the Author: Mr Chhatre  is a post-graduate in Commerce with CAIIB.  He is a university Rank holder at both graduation and PG level. He had joined banking industry as a direct recruit officer in Scale –II in year 1978 and had worked in several capacities at Branches, Corporate Office of PSU, New Pvt sector and MNC Banks. He had also held a position of CEO FIMMDA (a Banker’s Association). Last position held was Head of Ethics Compliance in a MNC Bank.     He has strong Treasury background.  He has worked as Head Integrated Treasury (Operations) in two new large Pvt sector banks and a Head of Domestic Treasury, Mumbai of a PSU Bank. He has a good name in Treasury and compliance field.  He can be contacted at   Tel: 91 22 28210125   Cell: 9819380114